In a recent development, the Insurance Regulatory and Development Authority of India (IRDAI) has allowed insurance companies to issue life insurance policies electronically without getting a wet signature from the customers for his or her consent on the hard copy of the proposal form till December 2020. As due to the outbreak of Covid-19 pandemic, filling up the form physically, getting signatures, printing and despatching hard copy of the policy has become difficult.
Therefore, with the intent to make the policy submission process easier while reducing the paperwork, the regulator has advised all the insurance providers for video based KYC for insurance issuance or video-based identification process (VBIP) for customer’s KYC process. To do this, insurers need to develop their own app and employ people to conduct the live VBIP for the verification of the customer. Several banks and non-banking financial companies have already started video KYC of customers after the Reserve Bank of India (RBI) had permitted to do so in January this year.
Now let’s understand how the process of video based KYC for insurance will work.
As stated in the circular by IRDAI, an authorised person from the insurance company will conduct the video-based identification process for KYC. The respective person is required to record the customer’s video, take photographs, and get information for identification through Aadhaar. Geotagging or live location of the customer will be taken to ensure the physical presence of the customer in the country. However, the authorised person for conducting video based KYC for insurance will have to provide a clear video, the customer’s face shall not be covered in any manner and should be easily recognisable.
Further, the insurer will have to make sure that the customer taking VBIP and the provided details by him or her should match with the customer’s photograph and the identification details in the Aadhaar. Also, the insurer or the authorised person needs to ask varied questions during the video interactions to ensure that interaction is real-time and not pre-recorded.
Video based KYC for insurance issuance is indeed necessary in the Covid-19 times to facilitate convenient onboarding of customers from any remote destination. In this way, the insurers will be able to reduce their operational costs while improving the penetration, reach and efficiency of their services.
However, insurers also need to look into the security and safety aspects while doing the VBIP. They need to ensure that the video recording has the time and date stamp and is kept safely and securely as per the Prevention of Money Laundering Act. To provide additional security and end-to-end encryption, the insurance company should carry out proper software and security audit and validation of VBIP application before rolling it out.
The VBIP process should be carried out only by the authorised person who is specifically trained for this purpose. The credentials of the official performing the VBIP and the activity log needs to be appropriately preserved for security purpose. The audio-visual interaction process has to be conducted by the insurer, and it cannot be outsourced to any third-party service providers.
As stated above, IRDAI permitted all life insurance providers to get customers’ consent digitally without requiring a wet signature on the policy hard copy until December this year. This is because of the growing spread of the Covid-19 that has severely impacted the movement of physical papers.
The filled policy application form can be sent as an email to the customer’s registered email ID or a message with a link on the mobile number. If the customer wants to give his or her consent, then the individual can click the confirmation link and validate through a one-time password. The insurers are supposed to carry out pre-verification calls for all such proposals.
This initiative is indeed a significant and necessary step to ease out the policy issuance process amidst this pandemic outbreak. So, if you want to buy life insurance policy and you are confused about how to do that in this challenging time then you can speak to the insurance experts of BimaKaro.in and clear all your doubts.